China’s Exports Continue to Slow, but The Domestic Economy is Holding up
China’s export performance clicked down another gear as weaker demand took its toll and the first signs of the stronger US dollar having an impact emerged.
- China’s export growth continued to slow, particularly to the US, Europe and Japan
- Imports remained solid supported by domestic demand
- Markets watching for currency intervention by the government if the yuan keeps strengthening vs $US
The better news in the official figures for August released by Chinese customs officials was imports held up well indicating the domestic economy remained robust.
Exports slowed in both US dollar and local currency terms and were substantially lower than market forecasts.
ANZ’s senior China economist Betty Wang was not alarmed by the export performance noting it came off a fairly high base.
The stronger than expected imports grew in US dollar terms and were relatively flat measured in the yuan.
While export growth slowed against the big economies — the US, Europe and Japan — it accelerated in most Asian economies.
From an Australian perspective, iron ore imports mirrored the domestic economy strength up almost 16 per cent on a year ago.
Yuan getting stronger vs $US
Capital Economics’ Julian Evans-Pritchard noted the slowdown partly reflects the renminbi’s recent appreciation against the US dollar — the currency in which most Chinese trade is priced
However, he said after adjusting for changes in import and export prices trade volumes weakened, and the stronger currency is probably not to blame for that given exporters have yet to meaningfully raise their US dollar prices in response to recent exchange rate movements.
“Instead, there appears to have been a broader decline in external demand,” Mr Evans-Pritchard said.
|Exports||+5.5pc ($US)||+7.2pc ($US)|
|+6.9pc (Yuan)||+11.2pc (Yuan)|
|Imports||+13.3pc ($US)||+11pc ($US)|
|+14.4pc (Yuan)||+14.7 (Yuan)|
|Trade balance ($US)||+$US42.0bn||+$US$46.7bn|
The performance will be watched closely by the market, worried a hint that the yuan’s rapid appreciation against the US dollar was affecting exports would trigger government intervention in the currency.
However, Ms Wang said on the available evidence this was unlikely.
“The strength in the yuan is unlikely to change our optimistic view on China’s near-term export outlook,” Ms Wang said.
“China’s role in global supply chains is unlikely to be replaced at least for now.”
Ms Wang noted China’s export competitiveness is gradually shifting from low value-added to high-tech products.
“If Apple’s share price is any indication, given that electronic shipments account for a major share of China’s total exports, the country’s export outlook is likely to be positive for now.”
You may be interested
1.4 million motorists illegally driving with dangerous tyres – two minute test to escape a fine and three penalty pointsWebby - May 24, 2018
More than one in five motorists are driving on dangerous tyres and 1.4 million of them are breaking the law, figures claim.That's according…
Holly Willoughby fans go wild over bikini throwback of her 'hot' mum Lynne as she celebrates her 70th birthdayWebby - May 24, 2018
Holly Willoughby is well known for her gorgeous curves, glossy locks and winning smile. And one look at her stunning mum confirms it's…
Sickening video game simulates high school SHOOTING and lets players slaughter innocent civiliansWebby - May 24, 2018
A sickening game that encourages players to recreate a mass shooting inside a US high school has been branded appalling by charities.The game,…